The US will suspend sanctions barring American investment in Burma in response
to political reforms, Hillary Clinton, the US secretary of state, announced
last night.

Mrs Clinton, flanked by Wunna Maung Lwin, Burma's foreign minister, said the US would issue licenses to permit investments in the country, but will retain laws to ensure against back sliding "as an insurance policy" as well as maintain a US arms embargo.

Speaking during the first official visit by a Burma minister to the US in decades, Mrs Clinton appealed for the country's remaining political prisoners to be freed. Burma said it freed more than 300 political prisoners in January, but rights groups estimate more than 900 remain incarcerated in the country.

In another tentative step in improving relations between the two countries, David Mitchell was appointed Ambassador to Burma. Mr Mitchell is an Asia expert who has helped oversee the rapprochement since last year.

Thein Sein, Burma's president, has initiated a series of political reforms in the last few months, including elections this year that led to Aung San Suu Kyi's NLD winning 43 out of 44 seats. Mr Clinton made the first visit to Burma in 50 years by a US secretary of state in December. David Cameron in April became the first British prime minister to visit since independence in 1948.